Last week, the financial services unit of Larsen and Toubro Ltd (L&T) offloaded a small portion of its stake in a listed firm—Kalindee Rail Nirman (Engineers) Ltd. The open market sale brings down L&T’s stake to around 11.8% from 14.7% that it held for nearly two years.

Graphic: Naveen Kumar Saini/Mint

Given that it’s not worthwhile holding or increasing the stake, L&T has timed its sale of shares well, as equity markets are surging. Kalindee shares have posted negative returns as its shares fell from Rs289 in April 2008 to Rs166. L&T shares, on the other hand, viewed to be the largest play on India’s infrastructure growth, have returned 37% over the period.

Analysts reckon that the firm is taking a re-look at most of its investments. Earlier this month, the media reported a part-sale of its holding in Mahindra Satyam. Last year, it had sold its stake in Ultratech Cement Ltd. The focus on engineering, procurement and construction seems prudent going ahead, given its huge order book of around Rs1.07 trillion as of end-June. L&T will perhaps divest its entire 11.8% stake in Kalindee too, though a timeline is not known.

On the eve of the September quarter results (to be announced on Monday), L&T shares changed hands at around Rs1,989 apiece. Analysts estimate a 12-14% year-on-year growth for the quarter in net sales and profit. Given expectations of 22-23% annual growth in earnings until fiscal 2012, the stock trades at fair valuations—with a price-earnings multiple of around 21.